Although this is certainly not the worst news that Europe has ever had, it still managed to slightly weaken the Euro by around 0.75% against the Pound.
For the UK, Retail sales (MoM Feb) showed a 0.2% increase since the previous month, showing that consumer spending has slightly risen. Not to put a dampener on the seemingly positive figures, but the Retail sales look at receipts of spending and not how the products were paid for. It could be argued that we were bound to see a spike in consumer spending after an interest rate reduction (increased borrowing?) as well as the ‘January sales period’ and Valentines Day. This Sterling positive news sent the Pound up by almost 1% on Thursday.
Taking a look further, retail sales (Year on Year) have in fact lowered to 5.5% from 5.9%. Not necessarily a surprise, however it certainly doesn’t help the sentiment that’s leaning further towards recession speculation.
The Bank of England’s minutes last week showed Deputy Governor John Gieve changing his mind and joining David Blanchflower in voting for an interest rate cut in March.
It seems that speculators in the futures markets are pricing in ‘at least 50 basis points cuts (interest) by the end of the year’ said Mike Peacock, Reuters. Worryingly, other economists such as Russell Jones at RBC Capital Markets who says ‘interest rates are going to come down quite hard in the second half of this year’ share the same sentiment.
Many Brits experienced a blizzard of Snow this weekend, even though winter officially ended at 0:48 am on the 20th March and Spring commenced. Whilst seasons may change the weather doesn’t necessarily follow suit. The same can be said for currency. There is no set time of day, week, month or year where the Foreign Exchange market sees specific positivity or negativity. Like the UK’s weather, you may hope for it to improve, but invariably the FX market goes the other way.
Perhaps by escaping the British Isles and moving your money to a different currency, neither the UK’s weather nor volatile pound will be a worry any longer!
Britain’s home sellers have been told to ‘get smart’ on prices before they lose out ‘when’ house prices drop this year, said the UK’s most used property site, Rightmove.
“Sellers should price below their competition to achieve more interest now and avoid a larger drop later this year.” Commercial director of Rightmove, Miles Shipside said.
The UK’s housing market is clearly going through a slowdown and for those looking to emigrate, it poses a greater threat, as the value of Sterling is too dwindling and there is real cause for concern that once you sell your UK property, your spending power abroad may be less than you had budgeted for.
Regrettably, Foreign Currency Direct cannot fix the value of your property and guarantee against the house market crashing. What we can do is ensure that the cost of your foreign currency need not diminish any further and help blunt one half of the current economic double-edged sword.
Ask your account manager about how we can tailor make your currency transaction to what you need and start protecting your money.
Today, expect some retail data from Canada around midday and consumer confidence results in the early afternoon for the USA.
More important date is released towards the tail end of the week including Germanys ‘IFO’ Business climate data, which shows the survey results of more than 7000 businesses. This will fuel expectation of the way the European Central bank may alter their strategy in improving their global economic stance. If positive, expect the Euro to see some strength, which wouldn’t bode well for the Pound as little data of major importance is due this week for the UK, so there’s not much to fight our corner. Keep in touch with your account manager at FCD to ensure you’re kept in the loop.
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